We all know that a bail-out is when outside investors (say taxpayers) rescue a borrower by injecting money to help service a debt. Bail-outs of failing banks in Greece, Portugal and Iceland were primarily financed by taxpayers.
But now, bailouts are not enough. While hiding behind untrue declarations of a desire to avoid 2008-style taxpayer bailouts, they plan, as the present crisis (2017) hits full-force, to simply seize the private bank deposits of ordinary citizens like yourself—“bail-in”, as opposed to “bail-out”.
So bail-ins, are a more severe version of a bail-out where banks empty a customer's bank accounts to pay off their debts. It's been used in Cyprus, Greece and it appears that governments and banks around the world are planning for mass bank bail-ins.
In the case of Cyprus, the creditors in question were bondholders, and depositors with more than €100,000 in their accounts. At the height of the financial crisis, governments avoided resorting to bail-ins out of concern that it might cause panic among the creditors of other banks; even the bondholders of Irish banks were initially spared. But as time has passed, and the cost of government bail-outs has risen, the appeal of asking private-sector investors to take a hit has increased. Ironically, it was one such bail-in—the restructuring of Greek government debt—that led to the problems faced by the Cypriot banks, which were big holders of Greek bonds.
The rationale for a bail-in goes like this...
When a bank fails because its assets (such as mortgage loans) are not enough to cover its liabilities, rather than it being declared bankrupt or bailed out with taxpayer money, said bank will be kept open for business by the intervention of a government-appointed bail-in authority, which takes over the bank and acts to reduce its liabilities. The authority will write down (cancel) some of the value of the bank’s debt. Creditors, such as holders of the bank’s bonds, may have those bonds converted into equity (shares) in the bank. Not only bondholders, but also depositors are classified as “unsecured creditors”. Thus, to reduce the bank’s liabilities the bail-in authority can vaporise the savings of its customers and assets of its bondholders, compensating them with worthless shares in the “resolved” institution.
https://www.cecaust.com.au/bail-in/2016_03_22_bail-in.html
http://www.economist.com/blogs/economist-explains/2013/04/economist-explains-2
CYPRUS was the test case. (to gauge public reaction)
The 2015 G20 held in Brisbane, AUSTRALIA, the powers changed a banking definition.
You as depositer will now be classified as "UN-SECURED INVESTOR".
That means they can legally steal your bank account..... and there's nothing you can do about it.
According to Zero Hedge, Napier says the G-20 will announce “that bank deposits are just part of commercial banks’ capital structure, and also that they are far from the most senior portion of that structure,” and as such, following a bank failure, “a bank deposit is no longer money in the way a banknote is.”
If this is the case, depositors with more on account than would be covered by deposit insurance would find themselves in line with everyone else trying to recoup what they can from an insolvent institution.
“Large deposits at banks are no longer money, as this legislation will formally push them down through the capital structure to a position of material capital risk in any ‘failing’ institution. In our last financial crisis, deposits were de facto guaranteed by the state, but from November 16th holders of large-scale deposits will be, both de facto and de jure, just another creditor squabbling over their share of the assets of a failed bank,” Zero Hedge writes.
The solution? Basically, stuff your money in a mattress. Or in this scenario, a warehouse. The blog helpfully measures the size of 500-euro note, measures the size of a standard shipping pallet, locates a typical storage warehouse in Northern Ireland and measures it, too. After crunching the measurements and comparing the cost of the deposit rate in Europeto the cost of renting the warehouse, well, you get the idea.
http://investmentwatchblog.com/nov-16-2014-g20-to-implement-a-new-policy-that-makes-bank-deposits-on-par-with-paper-investments/
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Hey jtest,
Thanks for the reply... :-)
Forget the warehouse...
Gold & Silver are “sound money”, they are NOT a commodity. When times of trouble & uncertainty occur gold & silver are safe haven assets that will hold their value via the energy they store. They are also a great inflationary hedge (say if they print too much fiat currency).
Sound money is defined as: "money not liable to sudden appreciation or depreciation in value, stable money; specifically: a currency based on or redeemable in gold/silver"
Gold & Silver, in 2017, are at record low valuations, keeping investors from even considering investment in them.
Take you cash from your banking institution (while you still can) out of the system and exchange them for physical Gold & Silver.
Jim Rickards, i believe has the best take on whats going to go happen.
"Imagine the money market funds are shut down. No one can get their money out of them. Then everyone runs to the banks to get their money. But the banks are closed. Then, everyone tries to sell their stocks, but the stock market’s shut down. And so on. In other words, the minute one part of the system shuts, all of the demand for liquidity moves to another part. But it dries up. And that part of the system has to be shut that down, too. Soon the entire system is shut down because it’s all so deeply interconnected. "
https://dailyreckoning.com/ice-nine-plan/
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Totally onto it.
I even knew the definition of money ;)
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